The Supreme Court ruled on Thursday that entities of Tiger Global incorporated in Mauritius must pay taxes in India for capital gains from the 2018 sale of shares in Flipkart Private Limited, which is based in Singapore, to Walmart Inc.’s FIT Holdings SARL. Justices J B Pardiwala and R Mahadevan overturned a Delhi High Court decision from August 28, 2024, that supported Tiger Global’s assertion of exemption from tax obligations under the India-Mauritius Double Taxation Avoidance Agreement (DTAA).
Following their purchase of a stake in Flipkart, the Tiger Global entities-specifically, Tiger Global International II Holdings, Tiger Global International III Holdings, and Tiger Global International IV Holdings-made further investments in various Indian companies. They subsequently requested a “nil” withholding tax certificate from Indian tax authorities, claiming their gains were exempt from Indian capital gains tax due to the DTAA’s “grandfathering” clause, as the shares in question were acquired prior to April 1, 2017.
The tax authorities denied this request, arguing that the entities were not making independent decisions and that the control over the share transactions did not reside with them. In response, the Tiger Global entities sought a ruling from the Authority for Advance Rulings (AAR), which on March 26, 2020, also dismissed their claim. The AAR determined that the exemption available to Mauritius residents applied solely to capital gains from the sale of Indian company shares. Since the gains originated from the sale of shares in a Singapore company, the transaction was ruled ineligible for exemption under the Mauritius Treaty. The AAR further concluded that the arrangement was primarily devised for tax avoidance.
The Authority explained that the investments made in the Singapore company-with ties to an Indian subsidiary-were primarily aimed at securing benefits under the DTAA between Mauritius and both India and Singapore. The AAR noted that the entities were part of Tiger Global Management LLC based in the USA and structured through a network of entities in the Cayman Islands and Mauritius. As a result, it concluded that the core operations and management of these companies were situated outside Mauritius, particularly in the USA.
On appeal, the Delhi High Court struck down the AAR’s order, citing “manifest and patent illegalities.” It criticized the AAR’s interpretation of the transaction, declaring it “wholly untenable and unsustainable.” The High Court found the conclusion that the transaction was crafted for tax avoidance to be arbitrary and not justifiable. It deemed that the transaction was properly grandfathered under Article 13(3A) of the DTAA, which was later contested in the Supreme Court. The Supreme Court ultimately overturned the High Court’s ruling.
Original Source: https://indianexpress.com/article/legal-news/supreme-court-tiger-global-liable-to-pay-tax-for-flipkart-stake-sale-10476507/
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Publish Date: 2026-01-16 01:26:00
